The ratings’ upgrade resulted from the reviewed scope of government support, due to the changed approach of the Central Bank to systemically important banks; this results in one notch of uplift to the bank’s senior unsecured debt and deposit ratings from its baseline credit assessment (BCA) of ba2. The BCA was affirmed at ba2 that reflects the bank’s strong solvency and liquidity metrics. The agency expects that the bank’s business model will remain resilient and the bank will continue to generate profits.
The agency noted the assets’ quality improvement in the first half of 2017: the share of problem loans reduced from the peak level of 12.7% in 2015 to 9.2% thanks to the bank’s successful work-outs of legacy problems. The reduced cost of risk and lower funding costs also helped the bank to substantially improve its profitability metrics: the return on average assets stood at 1.5% in 2016 and grew 2.2% (annualized ratio) in the first half of 2017. The agency indicated high level of capital adequacy and strong liquidity ensured by the constantly growing deposit base and a substantial liquidity cushion at 28% of total assets.
«The assigned credit ratings are an important confirmation of Alfa-Bank’s creditworthiness, the stability of its business model, and its systemic importance. Notably, the final local-currency long-term deposit rating is maintained on the level of Russia’s sovereign rating as well as the largest state banks, which is the highest indicator for a private bank in Russia», Alexei Tchoukhlov, Alfa-Bank Deputy Chairman of the Executive Board and Chief Financial Officer, said.